#1
Which of the following is a common source of short-term financing for businesses?
Bank loans
ExplanationShort-term loans from banks are commonly used to meet immediate financial needs.
#2
What does ROI stand for in the context of business financing?
Return on Investment
ExplanationROI measures the profitability of an investment relative to its cost.
#3
Which of the following is NOT a typical characteristic of debt financing?
Ownership dilution
ExplanationDebt financing doesn't dilute ownership; it involves borrowing money that must be repaid.
#4
What is the concept of 'bootstrapping' in business financing?
Using internal resources to fund growth
ExplanationBootstrapping refers to funding business growth using personal savings or revenue.
#5
Which financial instrument represents ownership in a corporation?
Common stock
ExplanationCommon stock represents ownership in a corporation and typically includes voting rights.
#6
What is the primary purpose of financial leverage in business?
To increase returns to shareholders
ExplanationFinancial leverage amplifies returns on equity investments but also increases risk.